Crystal Umbrella

PAYE umbrella contractors supplying the IT skills market are amongst those IT professionals experiencing greater confidence about their career prospects, according to a new poll by the recruitment firm reed.co.uk.

Three out of every four of the IT workers polled across the country are confident that they will be offered desirable roles over the coming six months. Speaking to the news provider “Recruiter” magazine, reed.co.uk’s Head of marketing, Mark Rhodes, said that the attitudes reflect a “slow and steady recovery” in virtually all areas of the private sector since the beginning of 2011. IT professionals appear to be especially positive about the immediate future.

Mr Rhodes went on to say that demand for IT staff is on the rise as more UK companies are “gearing up for a return to growth,” although he anticipates that the sector will once again experience a skills shortage as this trend gathers momentum.

The reed.co.uk poll coincides with data from the pre-employment screening firm Powerchex which reveals that offers for IT contracting in the financial services sector fell by 80 per cent in January. However, the figures also show a rise in contract offers of 3 per cent between January and February, and 8 per cent over the last year as a whole. In a press release, Powerchex MD Alexandra Kelly applauded the stabilisation in the number of confirmed appointments made to IT contractors, which was good news for those seeking contacting opportunities. But, she cautioned: “things have a way to go to recover in this area.”

Freelance contractors working through umbrella companies and limited companies are likely to support suggestions from the CBI, urging the Chancellor to make the determined pursuit of economic growth the top priority for his forthcoming Budget.

The employer’s group believes the government should focus on three key areas: dismantling barriers for high-growth firms, boosting domestic investment spending and enhancing export performance.

In its pre-Budget letter to Mr Osborne, the CBI also urged him to make changes to the tax system, arguing that the 50p income tax rate actively discourages the very entrepreneurship the government wishes to promote. Amongst a raft of other measures aimed at assisting medium to larger enterprises, the CBI also wishes the government to cut back on business red tape. This is discouraging many prospective smaller enterprises from even making a start.

CBI Director-General John Cridland said that the March Budget “must demonstrate a relentless focus on growth to get the UK working again.” An “all-action Budget” was urgently required to boost jobs, investment and exports, he added, with swift decisions on investment in the infrastructure playing a key part in the process.

The CBI’s advice follows recommendations made to the Chancellor by the Federation of Small Businesses last week, which called for policies ensuring economic stability. The FSB believes that only under economically stable conditions can smaller businesses develop the confidence to grow and hire more staff. Amongst the measures it advocated was an extension of a further year to the current National Insurance holiday, and providing finance for micro-businesses to take on apprentices.

PAYE umbrella contractors working in the IT skills market may experience another surge in demand for their services if advice from a leading managed services company is heeded. Advanced 365 has recently urged entrepreneurs running smaller enterprises to embrace cloud computing technology, after a recent survey from PeoplePerHour.com suggested that many SMEs are sceptical about the potential benefits to their business of adopting the model. Almost three quarters of SMEs polled (74 per cent) in PeoplePerHour.com’s study revealed that they do not presently use cloud computing, with 43 per cent admitting that they’re unsure about what, exactly, it is.

Advanced 365’s Managing Director, Neil Cross, said that the figures were “hardly surprising” – cloud computing technology is evolving exceptionally rapidly and the number of options available is proliferating continually, making it a struggle for SMEs to keep up with, let alone understand. He also noted a failure on the part of some value added resellers and IT service providers to promote the commercial benefits of cloud computing, mainly due to their own lack of understanding. This is exacerbating the problem, he believes.

Mr Cross claimed that SMEs are unable to make informed decisions about cloud computing for their business if the advice they are receiving from existing suppliers is unclear. He urged small firms who believe this might be the case to consult a specialist cloud partner for advice. By choosing cloud technologies tailor-made to their specific business needs, Mr Cross added, small companies can reduce costs and improve operational efficiencies substantially, as the cloud typically minimises the cost of in-house IT-management.

If permanent IT posts fall in companies turning to the cloud, there may well be an increase in the use of temporary IT specialists working for umbrella companies who have expertise in cloud technology.

IT experts contemplating the benefits of freelancing may be tempted to walk away from permanent posts and work through umbrella companies supplying the IT skills market, in the light of new research from ReThink Recruitment. IT contracting, it would seem, is poised to see a surge in demand.

ReThink’s study provides compelling evidence that IT directors in the UK have one over-riding priority: staff retention. Of those directors surveyed in the research, a sizeable majority – 85 per cent -  said they were “concerned” or “very concerned” about their ability to hold on to their IT talent in 2011.

A large number of respondents (41 per cent) had expanded their IT headcounts in 2010, and 80 per cent of those polled said they expected to preserve or increase their IT staff this year. ReThink Recruitment’s Director, Michael Bennett, said that the good news for IT experts was that the recovery in both pay and jobs is actually accelerating presently. But good news for the jobbing IT contractor can be a headache for employers, who now face a “very real challenge” in holding on to essential IT staff, according to Mr Bennett.

He went on to explain that the IT skills market does not have a large pool of unemployed IT talent swimming around in it waiting for IT directors to fish them out. Skills tend to be very specific and continually updated, with appropriately qualified people being snapped up very rapidly. This could indeed be a rather lucrative time for salaried professionals to opt for IT contracting.

PAYE umbrella contractors supplying the IT skills market might wish to take heed of recent advice proffered by a leading recruitment specialist on how to clinch the best work placements.  Professionals in IT contracting are widely respected for their technical expertise, but according to Richard Nott, the Website Director of specialist IT recruiter CWJobs.co.uk, this is fast becoming a criterion to be filed under ‘necessary but insufficient.’

Even though there is a significant shortage of IT expertise in the UK at present, IT professionals need to have additional ‘softer skills’ to do well in contemporary businesses.  Mr Nott elaborated on this by noting the new shift toward a ‘much more modern way of working,’ which he believes is demanding good communication skills from IT professionals as well as technical knowledge.

Referring to what he called ‘agile methodology,’ Mr Nott explained that it was now incumbent on IT professionals to develop ’softer’ communication skills in the organisations they work within,  as they are increasingly called upon to negotiate effectively with the commercial part of the business  to deliver the IT projects the company actually requires.  Today, the conventional model of an IT technician ‘sitting in the corner bashing out code all day’ is outmoded; today’s companies require people who can translate that code to the business end in plain, straightforward language and deliver required projects in time with business needs.

IT contractors working through umbrella companies might need to start purging their speech of techno-babble as a matter of urgency.  Those with the softer skills Mr Nott identifies may well find themselves securing the best placements.

If the old aphorism that necessity is the mother of invention is right, the recession may have unleashed a tidal wave of innovation in HR Departments across the UK, as more and more of them turn to umbrella companies to supply temporary staff. That’s according to Gerry McLaughlin of the specialist online IT portal, ITContractor.com, who says that there has been a “dramatic change” in the status of temporary workers amongst HR professionals in the UK.

Increasingly, companies are coming to view contractors from umbrella companies or limited companies as “integral” to their ongoing business, rather than as a cost (as they had been prone to view them previously), Mr McLaughlin explained. Even the major financial institutions, he said, were holding on to temporary personnel and opting to shed costs elsewhere, which should come as good news to freelancers on contractor payroll.

Contractors working in the IT skills market especially may be spared some of the worst effects of the economic downturn as a result of this growing trend, a fact reflected in the level of contractor pay rates which are at their highest since 2008, Mr McLaughlin added.

His comments, however, coincide with a rather less optimistic outlook for IT contractors produced in the latest market report by CWJobs.co.uk. The number of advertised posts for IT freelancers grew by a mere 0.9 per cent in the final quarter of 2010, the report indicates, claiming that the weak growth “may indicate a slowdown in overall IT recruitment activity in the coming year.”

Whilst contractors working for umbrella companies will have had their tax automatically calculated and paid, those who file self assessment returns should be on the lookout for a new e-mail scam, according to a warning issued recently by HMRC.

There has been an increase in the use of phoney emails disguised as official HMRC communications in recent weeks, this time advising people that they are entitled to a tax rebate.  But the first thing to note is that the real HMRC would never use email to inform taxpayers of matters such as this.

The fake emails contain a range of ruses aimed at getting people to divulge sensitive personal information.  One invites individuals to visit a webpage to verify their banking details; another claims that lottery winnings, seized goods or inheritance money will be paid as soon as the necessary personal banking data is supplied. Yet another invites people to download an attachment which ostensibly requests a refund through PayPal. In addition, HMRC warns, several such scams have emerged via SMS – recipients of these messages are asked to call a number in order to “claim” their “refunds.”

All are phishing exercises and should be avoided at all costs. If anyone receives such a message, HMRC requests that they forward it immediately to phishing@hmrc.gov.uk and then delete it without delay.

The timing isn’t accidental – the self assessment system inevitably results in many freelancers completing their returns at the eleventh hour (or later). Scammers tend to exploit flurries in activity to provide a convenient cloak for their nefarious deeds. Unsuspecting freelancers may be expecting all manner of communications and reminders from HMRC at this time of year, rendering fake tax-related emails more plausible.

HMRC will never contact you via email to request personal information or update you on personal tax matters.

Whilst some PAYE umbrella freelancers have recently admitted to being “uncertain” about their prospects in 2011, those supplying the IT skills market have more reason to be optimistic. According to a poll recently conducted by Enterprise Freelance Fair, only 41 per cent of freelancers working in the North West of England believe that market conditions are improving and 51 per cent admit to feeling uncertain about the coming twelve months. But the IT contracting community has received a boost from a new report from the global IT market analysis firm, IDC.

According to the IDC study, 2011 is likely to see a rise in IT spending of 7 per cent, a continued expansion which follows a strong period of growth during 2010. By the close of last year, global sales of IT goods and services reached £0.93 trillion, an increase of 8 per cent on 2009. Hardware investment was especially vigorous, with spending rising by 16 per cent – the fastest pace since 1996.

Commenting on the report, the Vice President of the IT Markets and Strategies Group at IDC, Stephen Minton, said that the IT market performed better than many had expected last year, as in fact had the global economy. Both business profits and stock markets returned to a cycle of growth in 2010 and it appears that many firms took advantage of the stronger-than-predicted performance to “make up for lost time” by upgrading mission-critical infrastructure and systems during the year, Mr Minton continued.

Further promising news has recently emerged for professionals working through umbrella companies in the IT skills market. According to Nathan Marke, who is Chief Technology Officer at the IT service provider, 2e2, more businesses are turning to cloud computing to increase flexibility and reduce costs, a move which should generate extra demand for IT contracting.

Mr Marke was speaking after the publication of a new International Data Corporation (ICD) report which reveals a growing trend in the direction of cloud computing. According to the report, the market in global cloud systems management software will have reached a massive £1.55 billion ($2.5 billion) by 2015.

Cloud computing technology offers businesses much greater flexibility, Mr Marke said, providing the potential to deliver growth at a reduced cost. In general, he went on, cost pressures have grown inexorably whilst IT departments struggle in the background to improve business agility and manage the “peaks and troughs in demand for applications and services.”

By contrast, cloud computing models allow businesses to achieve considerably more flexibility in their cost and skills base, Mr Marke continued. But they will also simultaneously deliver the optimal scalability for growth “at less cost and with greater flexibility than traditional IT models.” More and more organisations are realising this potential, he added, sharing his belief that cloud computing will become a “top technology priority” for businesses in the coming twelve months.

The IDC report also revealed that, increasingly, IT customers are expected to manage a blend of non-cloud, cloud and private cloud IT resources. IT contractors, it would seem, are set for a busy – and lucrative – future.

PAYE Umbrella contractors in the IT skills market may be intrigued by some developing trends which have come to light in the latest ITJobsWatch report. The survey shows that rates of pay for Developer roles have fallen by 6 per cent compared to the same period last year, with Developers now earning £400 per day as opposed to the £425 they secured in early 2010.

This is still a marked improvement on the £350 daily rate they managed in February 2009 but few freelancers are cheered by a decline in pay rates even so. By contrast, Business Analysts have seen their pay rates increase by the same amount – 6 per cent – on last year, taking their daily rate from £450 in 2010 to £475 today. In February 2009, the going rate for these roles was £425 per day.

Straight analyst roles have also seen a steady rise in daily pay rate through the years, growing from £375 in February 2009 to £400 in 2010 and reaching £410 today. Senior Analysts have seen the biggest leap, with daily rates surging from £440 last year to £475 now. Project Managers, too, have seen rates rise from last year’s £425 per day to this February’s £463. Senior Developers have perhaps suffered the most bruising trend – pay rates have declined from last February’s £525 per day right back to the level they were at in 2009: £450 per day.

It may be that offshore companies are picking up more developer jobs, although it’s equally possible that firms are recruiting permanent developers at present in preference to contractors. This pattern may change back in favour of contractors from umbrella companies later in the year.